Community bankers are sounding the alarm on the tax proposal that would require banks to hand over transaction data on accounts with over $600 net inflow and outflow.
In an effort to drum up cash to pay for a portion of the $3.5 trillion Build Back Better plan, Democrats proposed requiring banks to hand over the aggregate inflow and outflow of transactions on virtually all accounts - checking, savings, loans, investments - to the IRS, leading account owners to flood their local institutions with calls expressing privacy concerns.
Paul Merski, executive vice president of congressional relations and strategy for the Independent Community Bankers Association, told DailyMail.com that the proposal could cause the amount of unbanked or underbanked in the US to take a nosedive.
'Many of the unbanked are recently from other countries where they may have escaped a dictatorship-type government and don't trust government for good reason and this would scare more people out of the banking system,' he said.
'We're afraid all that info going to IRS is an invasion of privacy,' Merski said. 'This is info that the IRS couldn’t demand from individuals themselves so they're using third parties, using banks as kind of the police force for the IRS.'
More than two-thirds of voters oppose the proposal and only 22% support it, according to an ICBA-Morning Consult poll.
The banking industry has mounted a campaign against the proposal due to the immense cost burden it would impost on community banks.
But Treasury Secretary Janet Yellen insisted on Tuesday that there was a lot of unwarranted panic.
'Does this mean that the government is trying to peek into our pocket books?' CBS' Norah O'Donnell asked Yellen in an interview. 'You want to look at $600 transactions?'
Yellen replied: 'Absolutely not.
'I think this proposal has been seriously mischaracterized. The proposal involves no reporting of individual transactions of any individual.'
Community bankers are sounding the alarm on the tax proposal that would require banks to hand over transaction data on
